INSTITUTIONAL INVESTORS NOW OWN MAJORITY OF TOTAL HEDGE FUND ASSETS

Posted March 5, 2009

LONDON -- An absolute majority of all assets under management by hedge funds and funds of hedge funds globally are from institutional investors, and a third of those assets from institutional investors now come from pension funds, according to research by the Alternative Investment Management Association (AIMA), the international trade body for the hedge fund industry.

“Traditionally, high net worth individuals accounted for most of the assets under management (AUM) by the hedge fund industry globally, but institutional investors have been steadily increasing in significance in recent years and we think they now account for an absolute majority of AUM,” says Tom Kehoe, Research Manager of AIMA. “Pension funds account for about a third of that, or one-sixth overall. These figures are estimates, but they are informed by all the data at our disposal.”

The new research from AIMA defines institutional investors as pension funds, university endowments, foundations and governmental authorities. The research was based on consultation with AIMA’s members. The Association has more than 1,200 corporate members in 43 countries globally, including the leading industry hedge fund managers, fund of hedge funds managers, advisers and service providers.

“These figures demonstrate that the hedge fund industry plays an extremely important role globally for the institutions that look after everyone’s pensions and savings,” says Andrew Baker, Chief Executive of AIMA. “Hedge funds and funds of funds are skilled at managing risk and delivering stable returns, which institutions need at this time more than ever. They offer an extension of investment capabilities to institutional investors through their skills and expertise.”